Arab Today, arab today russia\s rosneft and bp strike mega oil alliance
Last Updated : GMT 20:45:53
Arab Today, arab today
Arab Today, arab today

Russia\'s Rosneft and BP strike mega oil alliance

Arab Today, arab today

Arab Today, arab today Russia\'s Rosneft and BP strike mega oil alliance

Moscow - AFP

Rosneft on Monday ceded a fifth of its shares to BP in a $61 billion game-changing deal that will let Rosneft pump half as much oil as Saudi Arabia and make BP a long-term partner of the Russian state. President Vladimir Putin immediately hailed the \"very good\" deal while analysts branded it the return of resource nationalism that turns Rosneft\'s chief executive Igor Sechin into one of the country\'s most powerful figures. The BP-Rosneft merger will see the British group acquire up to 20 percent of Rosneft\'s shares and get $17 billion in cash for its half in the crisis-hit TNK-BP joint venture that it currently co-owns with four Soviet-born tycoons. In the second part of the deal, Rosneft  is in talks to pay $28 billion in cash for the oligarch-held stake. The complete takeover of TNK-BP will spell the end of Russia\'s third-largest oil company -- a long cash cow for BP that generated $19 billion in dividends since its 2003 creation but that had become paralysed by a bitter board room split. The deal must still be approved by the Russian government but folds neatly into Putin\'s vision of creating national companies that effectively manage entire sectors of the economy for the state. \"On a political level, this likely outcome will demonstrate Putin\'s control over elite politics, and Sechin\'s dominance over the energy sector,\" the Eurasia Group risk consultancy wrote minutes before the deal became final. It called Rosneft\'s takeover of TNK-BP \"a tack toward resource nationalism\" that could allow Russia to \"potentially manipulate oil supply for political purposes.\" Putin saw the deal differently as he received Sechin at the Kremlin after the CEO held secret talks in London with both the BP board and a slate of private financiers who could help Rosneft score the massive deal. \"This is a good, large deal that is necessary not only for the Russian energy sector but also the entire economy,\" Putin told Sechin, one of his most trusted and longest-serving advisers. \"This is a very good signal to the Russian and international energy markets,\" Putin said. \"I am certain that it will be beneficial.\" Putin\'s comments are a strong signal that Russia intends to approve the acquisition despite worries among cabinet members over what Rosneft\'s rise may do to Russian competition. \"To avoid the mistakes of countries such as Venezuela or Mexico, the Russian state needs to create incentives for state companies to learn from their global partners, which will happen naturally if the (Rosneft\'s) strategy is based on shareholder value rather than scale and power,\" Renaissance Capital said in a research note. Analysts believe Rosneft has already lined up about $15 of the $53 or so billion in financing it will need to complete both parts of the TNK-BP acquisition. \"Rosneft is on the precipice of a truly historic accomplishment if it manages to simultaneously pull off transactions to buy out both BP and AAR in TNK-BP,\" the US-based IHS consultancy said in a research note. \"Raising financing... would be a huge task in itself, but with 100 percent of TNK-BP in the fold -- and the weight of the Russian state behind it -- Rosneft is certainly capable of managing such a deal,\" IHS said. Rosneft said Monday it was giving itself six months to close the deal. Rosneft\'s acquisition of both halves of TNK-BP will create the world\'s largest publicly traded oil company responsible for 4.5 million barrels of daily oil production and some 45 percent of Russia\'s overall output. Yet it should also help BP cement a long-term foothold in Russia that should firm up its plans to refocus its attention away from the United States after the 2010 Gulf of Mexico oil spill disaster. Sechin for his part called his company\'s takeover of TNK-BP \"historic\" and the most important deal in the industry since the tie-ups between Exxon and Mobile as well as Total and Elf.ere

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